Bill Presson

That would be interesting. Would practically never have to deal with RMDs if that was the case.

Well you can't force out participants with more than $5,000 unless it's a plan termination.

https://www.irs.gov/pub/irs-drop/n-05-05.pdf

Peter, say it ain't so! ?

Jak, the deadline to set up a new SH plan for 2021 is 10/1/21 because it has to be in existence for 3 months. For a SH match, you have to include it in the document and provide advance notice. For SH nonelective, you can include it from the beginning or add the provisions later. There's no notice required unless you have discretionary match that will satisfy ACP pass. No maybe notice required at all, that's baked in at this point.

Blue_Sky, the problem is that many of these questions CAN be answered in a conversation, but it's incredibly difficult to walk someone through all the permutations via a message board. Talk to your CPA or do a search for a local Third Party Administrator (TPA) to assist.

Make sure he signs/dates an election form prior to doing that.

Peter, I've not found a good reason NOT to have everyone in their own group for allocation purposes.

Agreed with the possible exception that I would tread more lightly if the plan was a safe harbor plan.

Are the employers large enough to be QSLOBs?

I don't mean to seem like an @$$, but why is this happening many times?

Ms Janice was a real sweetheart.

Very interesting. I've never processed a 5500 without the phone number or had anyone request it not be included. I looked at the instructions and it doesn't even suggest that it's optional.

Thanks John!

Austin, we've done some of these before. We usually use the Vanguard/Ascensus plan set up. Just be careful you don't get pulled into doing things the advisor would do. We consistently had to push back on the sponsor about employee education and answering participant questions, etc. They tend to lean on you as the expert in all things without that additional body around.

Peter, I have always used the stance that once a participant has satisfied the conditions to receive a contribution under a current allocation method (if one is made) then that allocation method can't be changed. Historically those included a single allocation group (like for a pro rata allocation) or last day employment or 1,000 hours of service. The restrictions on amending safe harbor plans in general has caused me to be a bit more cautious. But I find in most cases if the benefit is significant enough, the new plan for one year method works pretty well.

Don't need to. Meets this exception: Plan merger or consolidation or spinoff. Do not file Form 5310-A if the plan merger or consolidation or the spinoff complies with Regulations section 1.414(l)-1(d), (h), (m), or (n)(2). Generally, these requirements will be satisfied in the following four situations: Two or more defined contribution plans are merged and all of the following conditions are met: The sum of the account balances in each plan prior to the merger (including unallocated forfeitures, an unallocated suspense account for excess annual additions, and an unallocated suspense account for an ESOP) equals the fair market value of the entire plan assets. Example. Neither plan has an outstanding section 412(d) waiver balance. The assets of each plan are combined to form the assets of the plan as merged. Immediately after the merger, each participant in the plan has an account balance equal to the sum of the account balances the participant had in the plans immediately prior to the merger.

No, they can't because they've already "earned" the right to the current allocation method. What they can do (and I've done before) is to start a brand new PS plan with whatever allocation method they want and then merge it into the existing plan on 12/31. We've done the new document and merger materials simultaneously. Made the receivable deposits after the end of the year to the surviving plan. Do a 5500 for the new plan that is the first, last and only 5500. Show a transfer out on the asset section. Show a transfer in on the surviving plan. WCP

Bump

I still remember the joy of upgrading from my 4800 baud modem to a 14.4kb modem and it was screaming. It would upload the answer packet and download the new message packet and I was golden for another evening of trying to keep the hell up.

Well, it's tax fraud and I'm not sure there's a specific reg that says "don't commit tax fraud" anywhere. It isn't an approved corrective fix for a top heavy plan. Technically no one is eligible for the top heavy minimum yet because they aren't employed at the end of the year (assuming a 12/31 year end). So, one solution is to terminate a bunch of employees. Another is that the contribution (whatever amount it is) doesn't have to be deposited until 12/31/2021, though earlier for deduction purposes. Not a lot of great fixes here.

What is the issue with distributions?

It should be allocated as long as it's not violating any other limits. Doesn't matter whether it was deducted or not. They could choose to not deduct anything.

Agree with ESOP Guy. There's no penalty for choosing to not deduct an eligible expense.

Agreed.